As you walk into your pharmacy chain of choice around this time of year, you're probably bombarded with signs that say, "Free Flu Shots Here." If that's not a big enough hint, the pharmacist may remind you as you pick up your prescription, or you may get calls about it while you're at home.
Of course, free flu shots are a great thing. No complaints about that here. But you may have wondered why in a world where seemingly everything has a price, you can get this possibly life-saving medication for free if you have health insurance.
The reason is all about human behavior. The recently released 2015 World Development Report, which examined how human behavior affects global development, has some interesting findings about the importance of price in getting people to take preventative health measures. It turns out that people will take health measures at a cost of zero or close to zero, but they are "almost completely unwilling" when the price rises "just slightly above zero," according to the report.
Sure, low prices make products more affordable to a wider range of people. However, the report notes that "free" has a special meaning.
"When prices fall toward zero, free may convey a social norm: we should all be doing this," according to the report. "Free allows people to experiment with a product when they are uncertain of its value, and free can have an affective influence (an individual is excited to have won the opportunity to get something free)."
The report looks at six cases around the world, which includes deworming, bed net vouchers, water disinfectant and bed nets in clinics in Kenya; water disinfectant in Zamibia; and soap in India. The report shows that in all of these cases, increasing the price to an amount slightly above zero, even to only 10 cents, reduces the percentage of people who use the preventative measure, sometimes dropping as much as about 40 percentage points.
In addition, the report found that when something is free, people have a tendency to not overthink. They take advantage of the offer and are less likely to change their minds about obtaining the product. They may even be more likely to share them with relatives, as was the case with households given free mosquito nets. These households were more likely to give them to their children. However, one downside of free items, as the report points out, is that people can "overconsume or waste the product."
How people react to free or minimal pricing, is a burgeoning area of research in developing countries, but these findings can also be applied to countries in the developed world, like free flu shots in the United States. As The Atlantic notes, "it's a fairly universal rule that if governments or businesses want people to take care of themselves, they have to make it as easy as possible."
